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The State election on 26th March saw a crushing political defeat for the Australian Labor Party in New South Wales. Both sides of politics are still coming to terms with the magnitude of this change. On the Labor side internal recriminations seem to have spread beyond NSW. The Coalition now seem to have an assured eight and probably twelve years, or more, to carry out their agenda.

On April 3, following the advice of the Executive Council, the Lieutenant-Governor of New South Wales, gave effect to an Order to restructure the NSW Public Service. Read more...

It remains to be seen how the restructured agencies will go about the business of rebuilding the State.

The difference between a political parties and Australia has become less well defined during the last 40 years as the major parties have competed for the centre.

We might expect the new government to make some changes in some regulatory areas but in many cases there is considerable cross party consensus. Paradoxically the Australian Labor Party is still nominally socialist, yet the final straw that broke their back was an attempt to privatise part of the state’s electricity infrastructure. There is an interesting letter from Paul Keating to John Robertson on this subject (click here). Although Labor likes to maintain that they are more generous in social assistance areas, we are unlikely to see significant cutbacks under a Coalition that, as always, say it governs for all Australians. So what will be the major differences?

The new Premier, Barry O'Farrell, has issued the following short statement:

Colleagues

This morning I was sworn in as Premier of NSW, along with Andrew Stoner who was sworn in as Deputy Premier. It is a great honour and an exciting responsibility.

My Government was elected on our five-point plan to make NSW number one again.

It includes:

1. Rebuilding a strong economy;

2. Restoring quality services;

3. Renovating essential infrastructure;

4. Restoring honesty and accountability to Government; and

5. Returning power and decision making to the community.

I know that our plan can only be delivered with the support of a creative, innovative and world class NSW public service.

Over the next four years I look forward to working with you to implement our policies to ensure the community receives the highest standard of service from its new government.

Yours sincerely

Barry O'Farrell 28.3.11

Renovating essential infrastructure and restoring quality services

The electorate now expects the new government to actually do something to improve the State’s ailing transport and utilities infrastructure and to get regional business moving. Also on the agenda are improvements to health services and education. In each of these areas the Commonwealth has already made commitments of support but there are some grounds for believing that NSW is getting less than its per capita share of Federal support; and the new government can be expected to be more aggressive in making this point.

In many of these areas the new government will be constrained by the same things that constrained the old. Treasury continues to be concerned that the State does not risk its triple-A rating as this would raise the cost of existing loans and new borrowings, through increased interest rates, to unacceptable levels. It has been argued that borrowing for legitimate capital purposes should not injure the State’s credit rating. But this only applies if it can be demonstrated that such investments would generate a return sufficient to pay for the cost of capital. Thus the State could raise capital for a Sydney metro, provided it could demonstrate that the revenue from fares and taxes, and possibly associated land development, would be sufficient to service the capital borrowed for the project.

The previous Government attempted to borrow indirectly on several road developments through a variety of public private partnerships (PPPs). This seems to be a model that is fraught with difficulty in that investors either profiteer or fail miserably. But the older model, in which the State raises the loans and recovers the cost, through a toll or increased taxes, is often subject of special pleading by a variety of interest groups. This seems to be particularly fraught in the case of rail development where proper fares are seldom charged and where property owners, rather than the Government, make windfall gains in the vicinity of new stations.

It is to be hoped that some new administrative and governance paradigms will be explored; and professional and fearless, rather than political advice, will be sought from the appropriate experienced and qualified professionals in the public sector.